The New Big Data Mandate: Consider the Source

In the period from the beginning of recorded time until 2003, humans created 5 billion gigabytes of data. In 2011, the same amount was created every two days, and by next year, that time is predicted to shrink to 10 minutes.

These eye-popping statistics come courtesy of IBM, whose head of supercomputer development, David Turek, recently penned an article for Bloomberg Businessweek entitled “The Case against Digital Sprawl.” In it, Turek argues that companies need to get ahead of the extreme data density being driven by socially networked customers, tweeting employees, YouTube-loving marketers, and what he called “an Internet of data-savvy and data-spewing objects.”

In multiple presentations for LIMA this year, I addressed what the “Big Data” phenomenon means for brand marketers and how it begs for new collaborative approaches between retailers and brand partners. Retailers are determined to harvest and leverage the explosion of wildly diverse data, because it enables them to evolve from the transaction-based POS-world approach of looking at what people have already bought, and into understanding intentions, interests, and connections – dynamics that are a much better predictor of what people will actually buy in the future.

Up to this point, most of the conversation regarding Big Data has centered on management and utilization opportunities, in terms of what to do with information once it arrives. The next development in the Big Data scene comes in the form of a challenge: how it is obtained in the first place. Privacy issues are nothing new in retail as concerns regarding credit card transaction data, smart phone-enabled geo-location tracking and other obvious sources of personal information loom large with consumers. Now, growing controversy over stealthier data tracking methods promises to elevate perceived threat levels even as those methods bring game-changing results to brand marketers. Websites and mobile devices use a variety of software to determine a user’s browsing habits, for example, and marketers can then use that data to target “behavioral ads” designed with people’s habits in mind. In some cases, electronic tags can predict if a consumer is price-sensitive, allowing sellers to accordingly charge more or less for a product or service. As various social platforms such as Facebook and major browser platforms such as Google and Yahoo become more proficient at combining insights into users’ viewing, browsing, purchasing, sharing, and movement habits, the “single view of the customer” that is so desired by marketers may come to look like a highly-intrusive X-ray.

Public awareness and resistance is growing, even as negotiations over “do not track” (DNT) legislation are at a standstill in Washington. The Federal Trade Commission first proposed adding a DNT button for the web in 2010 as a follow on to its popular “do not call” list. Advertising Age has reported that Consumer Reports recently sent its members an email warning that they may be being tracked by advertising companies against their will, but noted that Consumer Reports’ own website is loaded with the very advertising-tracking technologies that it claims to reject.

In February of this year, all of the major web browsers promised to offer a DNT feature, and the Digital Advertising Alliance, a coalition of advertising trade groups, promised to stop displaying targeted ads to users who selected the feature by year-end. Microsoft was given kudos in June when it announced that it would make DNT the default seeing on its newest version of Internet Explorer. These self-regulating steps were undermined last month, when the Digital Advertising Alliance advised its members to ignore DNT signals from Internet Explorer users, arguing that DNT requests don’t necessarily reflect the user’s intent if they are set by default. Advertisers have further complicated matters by insisting on exceptions to DNT policies for market research, product development, system management, and other self-defined purposes.

All of these developments mean that realizing the opportunities presented by Big Data involves big controversy…

Bottom line:

Product recalls, contract violations and celebrity brand endorsement snafus are some of the ongoing risks of the licensing business. Going forward, data collection and utilization practices will receive more scrutiny, and any missteps will have the potential to derail brand programs and ding reputations.

Even though self-regulation efforts and moves for legislative mandates will continue to evolve, licensing collaborations should include proactive reviews and agreements on best practices and accountabilities regarding data.

Third-party data providers and analytical resources should be thoroughly vetted based on their knowledge of, and adherence to, current standards before they are employed.